U.S. Retirement Plans Turning to Active Management to Navigate Volatility and Concentration Risk

By: Scott Garrett, Schroders

Schroders’ 2026 Global Investor Insights Survey shows U.S. retirement plans are preparing for higher market volatility and are leaning on active management to strengthen diversification, downside protection, and resilience.

Sponsors of U.S. retirement plans are prioritizing portfolio diversification, capital growth, and income generation as they navigate a market environment marked by volatility, market concentration, and structural shifts, according to the Schroders’ 2026 Global Investor Insights Survey (GIIS). Among the 207 North American institutional investors surveyed, 97 represented U.S. retirement plans, 76% of which were from defined benefit plans.

This year’s findings highlight the breadth of challenges institutional investors are navigating today, from geopolitical uncertainty to AI-driven disruption and heightened market concentration. Seventy-nine percent of U.S. plans believe the next 12 months will hold more market volatility than the previous year, driven by geopolitical escalation or armed conflict (54%), economic slowdown or recession including stagflation and labor market weakness (47%), commodity and energy price shocks (46%), and AI-driven disruption (44%).

Geopolitical risks are already shaping investment decisions, with 73% citing conflict in the Middle East as a factor influencing decision-making. Against this backdrop, U.S. plans continue to prioritize portfolio diversification (85%) and downside protection/capital preservation (79%), while also maintaining a focus on capital growth (63%) and income generation (52%).

Sectors/investment themes most likely to provide returns and diversification in a rotation away from AI and technology include real assets (47%), followed by energy (including energy transition) at 44%.

Active Management Remains Central to Portfolio Construction

Investors are looking for ways to balance growth ambitions with greater diversification, income generation, and portfolio resilience. Eighty percent of U.S. plans expressed strong confidence in active management to help achieve investment objectives over the next 12 to 18 months.

Fifty-three percent say they are increasing allocations to active management to reduce concentration risk in equities and to capture active’s nimbleness to navigate uncertainty. Plans also view global equities as the asset class that stands to benefit most from increased active allocations, with 35% selecting it.

Holistic Approach to Asset Allocation

Plans are increasingly recognizing that some of the most compelling growth and alpha opportunities may not fit neatly within traditional public-market allocations.

As companies remain private for longer, U.S. plans are taking a more holistic approach to equity allocations — looking across both public and private markets to access growth and return opportunities. Private equity allocations are expected to rise, with 89% of U.S. plans currently allocating to private equity, increasing to 91% over the next 12 to 24 months.

For income generation, 58% say they evaluate income-producing opportunities holistically across equities, fixed income, and private markets.

That shift is also shaping where U.S. plans see the strongest risk-adjusted income opportunities over the next 12 to 18 months. Equity income (45%) ranks as the most attractive risk-adjusted income opportunity, followed by actively managed public corporate bonds (42%) and diversified government bond exposures (36%).

Within credit markets, U.S. plans see some of the strongest alpha opportunities in more specialized strategies. Among those investing in these areas, 76% identify emerging market debt, followed by distressed and special situations credit (67%) and subordinated or below-investment-grade private credit (64%).

Plans are moving beyond traditional asset-class boundaries and taking a more outcome-oriented approach to portfolio construction, seeking complementary sources of growth, income, and diversification across public and private markets.

Click here to read the full results of Schroders’ 2026 Global Investor Insights Survey.

Scott Garrett, CFA is the U.S. Head of Institutional for Schroders. He joined the firm in 2019 and has more than 25 years of experience in the industry. Prior to joining Schroders, Scott was a Senior Vice President at Systematic Financial Management (2006-2019). He was responsible for Institutional Sales, Consultant Relations and Relationship Management.

Scott began his career in the Investment Consulting industry in 2000. Scott holds the Chartered Financial Analyst (CFA) designation and is a member of both the CFA Institute and the Los Angeles Society of Financial Analysts. Scott graduated from the University of Arizona with a B.A. in Political Science.

Disclosures: All investments involve risk, including the loss of principal. Past performance provides no guarantee of future results and may not be repeated. The views shared are those of the author and may not reflect the views of Schroders Plc or any of its affiliates. Information herein has been obtained from sources we believe to be reliable, but Schroders Plc does not warrant its completeness or accuracy. No responsibility can be accepted for errors of facts obtained from third parties. Reliance should not be placed on the views and information in the document when taking individual investment and / or strategic decisions. Any mention of industries or sectors is for informational purposes only and should not be interpreted as a recommendation to invest or divest in any company or adopt a particular investment strategy. Schroder Investment Management North America Inc, registered as an investment adviser with the SEC, CRD Number 105820.

Survey Methodology The research was carried out by CoreData Research via an extensive global survey during April - May 2026. The survey captures the perspectives of a broad spectrum of investors, including pension funds, insurance companies, single family offices, endowments and foundations, official institutions, and wealth managers and other intermediaries.